Tuesday, April 29th, 2008
eCommerce Summit Q&A: Part 2
In a continuing effort to provide all questions and answers that came out of the Summit last week - and the questions asked here on the blog - here is part 2 of the Q&A. This post highlights the ongoing shipping & handling discussion that came out of the “Navigating the Changes at eBay” panel. I’ve also added an answer to an Ink reader’s question (CrunchyPostingGoodness) that I asked while down in New Orleans.
NOTE: If you have already asked a question, please do not re-post it. I assure you I am working on all answers for you. Thanks for your patience…
In the keynote, I heard reference to shipping prices going down and I also notice there is a push toward to free shipping on the site. Retailers can do that but it is priced into the total cost… and I have no problem with that. My question is, we all know you have $5 billion in cash, why not put some of that into subsidies for buyers to help with their shipping costs? [Applause]
Lorrie Norrington: Let me take that one… it will be fun. [Applause]. First of all, I would say that shipping costs are going down – we’ve seen that in the first quarter. As Dinesh referenced earlier, free shipping is becoming increasingly popular on the web and sellers are out there being much more cautious with regard to their shipping costs. They’re being much more accurate when pricing it out. Now, why don’t we just write a big check and subsidize it? Well, eBay isn’t holding the inventory, eBay is having a take rate for everyone of those transactions. If you cover free shipping there would be exactly zero in that transaction. It’s just the way that the economics of our marketplace works. If you’re holding the inventory, you can subsidize free shipping and the economics will work for you. Our approach is to try and find the best possible rates for our sellers and put as much influence on the carriers to guarantee our sellers can get the best possible rates.
Matt Halprin: There is one suggestion I’ve heard that we’ve debated internally on. If we gave a small final value credit for sellers that provide free shipping, since eBay is actually making a little more money on that transaction, that’s something we’ve talked about.
CrunchyPostingGoodness asked: Why isn’t PayPal confirming all buyer shipping addresses for all sellers? Amazon guarantees every shipping address for all of their sellers. I doubt that Amazon can actually verify every address, just like I’m sure PayPal can’t either, however Amazon does assume all responsibility and protects sellers who ship to any address specified by the buyer at checkout. Even if PayPal can not physically confirm every address, it should still provide the seller with the same protection, as if the address was able to be confirmed.
Monroe Labouisse, Director of North American Marketplaces, PayPal, had the following answer:
At PayPal, we agree that we should help protect sellers from fraudulent buyers and we do it today in a variety of ways. One way is that, using new fraud detection technology, we have greatly expanded the number of confirmed addresses for all sellers in our system in the past two years. A second is that we have just introduced expanded seller protection for eBay PowerSellers in the US, UK, Canada and Hong Kong (and in Australia we’ve rolled out seller protection for all sellers), in which, as you suggest, a seller just has to ship to the address provided by a buyer at checkout. It’s free for PowerSellers, no longer has a coverage limit, and addresses aren’t “confirmed” or “unconfirmed” anymore - you just ship to the address provided by the buyer through PayPal. Provide great experiences for buyers, qualify for PowerSeller status, and then along with the many other benefits eBay provides, you can get this protection from PayPal.
Two other things that are worth pointing out, in reply to your comment: 1) contrary to your statement, Amazon does not protect sellers who ship to “any” address provided by a buyer in checkout (I’ll explain more below), and 2) Amazon charges more for transactions at high price points (where fraud is most likely to take place) than eBay and PayPal together charge.
On the first point, it’s more accurate to say that Amazon protects sellers who ship to the address that Amazon “allows” to go through checkout, not that they protect sellers who ship to “any” address a buyer provides. Before allowing a transaction to go through, most payment systems (including PayPal’s and Amazon’s) will check the safety of an address. If an address is considered unsafe, then the transaction may be denied, or the buyer may be required to provide more information to authenticate the transaction. In both cases, a sale may be turned away. And to my second point above, in part to cover the cost of fraud at high price points on transactions it is letting through, Amazon charges you more than eBay and PayPal combined.
At PayPal, we are taking an approach to protections that we think is better for sellers’ businesses. First of all, we do protect sellers on a large majority of transactions. Second, sometimes we let transactions go through that we choose not to protect, but we let merchants know when that is the case and provide them with information they need to decide on their own what’s right for their business. And finally, we charge less at high price points than Amazon - and less than the electronic payments industry in general across all transactions.
Tagged: amazon, buyers, ebay, ecommerce, ecommerce summit, Events, feedback, lorrie+norrington, Marketplace, matt+halprin, paypal, sellers, shipping, shipping costs, shipping+handling, summit, trade shows, transaction
TheBrewsNewsOn 04.29.2008 at 3:47 pm Said:
QUOTE: “On the first point, it’s more accurate to say that Amazon protects sellers who ship to the address that Amazon “allows” to go through checkout, not that they protect sellers who ship to “any” address a buyer provides.”
My response:
YES YES YES and YES again!!!!! That is EXACTLY what I want as a seller. Don’t give me an eBay order where the buyer won’t pay (but of course I get the privilege of paying fees to eBay for that nonpaying bidder) and then if the bidder does pay there is a good possibility that I won’t be protected. I would gladly take an Amazon order ANY DAY where the address I am given is one that Amazon “allows.” If a customer on Amazon continually claims not to receive packages from a variety of sellers then guess what Amazon does? Yep, no more orders allowed for that buyer / address. Sounds like HEAVEN to me!
PLEASE that is EXACTLY what we eBay sellers are BEGGING eBay to do…. get rid of the deadbeat and fraudulent buyers. Or, at the very least, allow us sellers to do it ourselves by linking any new buyer’s IDs to their current or previous IDs so that we can block them ourselves. Instead, eBay is opening their welcome arms to all the Amazon-rejects. I guess that is one way to get new eBay buyers.
**************************
QUOTE: “And to my second point above, in part to cover the cost of fraud at high price points on transactions it is letting through, Amazon charges you more than eBay and PayPal combined.”
My response:
Yep… you are right again! And I absolutely positively want that. Let’s compare my eBay versus Amazon sales for ONE particular “high price point” item. I offered the SAME exact item for sale on eBay and Amazon. I sold the item in both venues.
eBay Sale
Took me three times to list before it was sold. Paid insertion fees 3 times. Of course, I cannot get nearly as high a price on eBay as I can on Amazon for the same exact item so I have to offer the item for sale at a significantly less price AND I offer free shipping on eBay. So….
Item sold (after 3 attempts) for $199.99 and free shipping.
eBay fees (insertion and final value fees) of $13.76
Paypal fees $6.10
Total paid to eBay / Paypal - $19.86
NET proceeds received - $180.13
Amazon Sale
Of course I receive a much higher price for the same item AND I charged shipping fees to the buyer.
Item sold for $259.99 plus $28.77 shipping.
Insertion fee - $0
Amazon commission $43.32
NET proceeds received - $245.44
It’s kind of a no-brainer for me… I get $180.13 net proceeds from eBay or $245.44 net proceeds from Amazon for the exact same item. Amazon can charge me more than eBay any day! For me, it is a Win/Win on Amazon for high price point items.
****************************
MistyOn 04.29.2008 at 3:53 pm Said:
With shipping labels printed through PayPal what is PayPal doing to ensure that USPS is scanning all DC packages upon delivery? What recourse do we have if/when they don’t?
Randy SmytheOn 04.29.2008 at 4:34 pm Said:
TheBrewsNews
Can I repost you comment on my blog? That is a perfect example of the differences between the marketplaces.
On eBay you have the “eBay discount” to account for perception of the marketplace.
it has never actually been about the fees IMO. Sellers want value for their fees and are willing to pay more for more value.
Please email me and let me know if I could repost your example.
Thanks
RKS
DagnyOn 04.29.2008 at 4:53 pm Said:
“Provide great experiences for buyers, qualify for Power Seller status, and then along with the many other benefits eBay provides, you can get this protection from PayPal.”
As individual who did $200-500 in sales per month (I have stopped selling and buying for now) who provided great customer service and who has no desire to be a Power Seller…why must all of the goodies and protections be based on volume and not solely on performance?
If providing a good buyer experience was truly the goal of eBay then I with my terrific DSR’s (lowest is 4.7) would be rewarded with discounts and protections.
What incentives is eBay going to give me to start selling again on their site? Is my business not important to eBay?
I’m forced to take PayPal. I risk having my money held for 21 days because I sell in the computer networking category. My reputation is subject to the whim of buyers who choose not to pay but can suffer no damage to their public reputation. They can create new ID’s at will. Non-public sanctions are only useful up to a point.
Richard, what will eBay do to keep me as a customer? Right now the only message I am getting is…”Go away kid, ya bother me.”
CrunchyPostingGoodnessOn 04.29.2008 at 7:45 pm Said:
Richard,
I thank you so much for asking my question, but as is the norm for eBay, Monroe Labouisse completely missed the main point of my question, and if fact, provided completely incorrect information with regards to Amazon. Please allow me to clarify and correct.
First, my main question was, “Why isn’t PayPal confirming ALL buyer shipping addresses for ALL sellers?” I’m not sure how much clearer I can make it. Labouisse’s response is in regards to Power Seller protections only, so unless all sellers are Power Sellers (and I know they are not), then his entire response is worthless and has nothing to do with the question I asked. Even Colin, from PayPal, was able to understand my question when I asked him in this blog, so I’m not sure how someone who is supposed to be educated like Labouisse is not able to understand it too.
This is just another plain example of how the responses users get from eBay and PayPal have nothing to do with what was asked. It is rather frustrating, and doesn’t serve to instill trust.
1. An Amazon buyer can enter any Ship To address they want and Amazon guarantees it. The buyer enters the Ship To address at the time of payment, so it appears on the sellers packing list. Buyers do not change the Ship To address after the fact, and are in fact, instructed not to contact the seller after the fact to switch it by Amazon. The address does NOT need to match the credit card or the buyer’s address. So when Labouisse says, “it’s more accurate to say that Amazon protects sellers who ship to the address that Amazon “allows” to go through checkout, not that they protect sellers who ship to “any” address a buyer provides”, he is wrong. I sell on Amazon, as a Pro-Merchant, and I can guarantee you that he is wrong.
2. He is also wrong about, “Amazon charges more for transactions at high price points (where fraud is most likely to take place) than eBay and PayPal together charge”. The most Amazon charges is 15% of the entire transaction, dependent upon the category. They do not base it on “price point”, but on competition levels determined by the number of sellers in a particular category. In fact Electronic items and Computers, which would be considered “high risk” only get charged 8%. The category I sell in, which is considered “low risk”, is 15% commission. I do not pay a listing fee - I do not have to re-list (paying more fees) every 7 or 10 days. I don’t know where he is getting his misinformation from. Perhaps it is the same place which tells eBay these changes are good?
Not to mention the fact that I can sell my items there for more money and less hassle than eBay.
I have had two charge backs attempted against my account there, and neither one was granted. The buyer didn’t go through any Amazon claim process. The buyers tried to perform charge backs directly through their credit card company, and Amazon did NOT allow it. All I needed to do was provide Amazon with the delivery confirmation number, which showed the item was delivered, and I got to keep my money. I think we all know from BrewNews’s experience how well PayPal protects sellers with regards to charge backs. These were my actual experiences with Amazon. They are fact, and therefore I place more trust in them than Labousisse’s fiction.
Perhaps you should invite him to post here, so he can become educated on how Amazon really operates and protects its sellers?
“Second, sometimes we let transactions go through that we choose not to protect, but we let merchants know when that is the case and provide them with information they need to decide on their own what’s right for their business.”
…and the buyer can leave negative feedback for the seller, should PayPal decide to let an unsecured payment go through, and the seller refuses the payment. Perhaps they do that because it isn’t PayPal who will lose money, but the seller?
Again Richard, I thank you for asking the question. However, I’m sorry that Director of North American Marketplaces, PayPal, choose not to address it.
Perhaps you can ask it again, or have him read the responses here, so perhaps he will understand the question better?
spinach.chinOn 04.29.2008 at 8:27 pm Said:
On the first point, it’s more accurate to say that Amazon protects sellers who ship to the address that Amazon “allows” to go through checkout, not that they protect sellers who ship to “any” address a buyer provides.
Monroe, just exactly what address do you expect that sellers ship to when receiving an Amazon order? On Amazon, ANY seller (not just big sellers) can ship to ANY address provided through the Amazon checkout process, and they will be covered. It’s as simple as that. Amazon has had that protection in place for some time now, whereas eBay/PP is just getting around to implementing their version of it - albeit, for powersellers only…
At any rate, comparing fees of PP and Amazon are apples and oranges. Amazon sellers can charge a fair shipping charge to their customers knowing that the venue (Amazon) has their full support behind your right to do so. Also, I would give a conservative guesstimate that my items sell for 25% to sometimes 40% more than they do on eBay - this is for items that sell mainly in the $5 to $20 price point. The comparison of fees on the two venues is non-existent - I am concerned about my bottom-line, not about how much I am paying in fees. If I paid an extra dollar in fees, but made an extra $2.50 in profit, am I not better off?
Perhaps you can ask it again, or have him read the responses here, so perhaps he will understand the question better?
Crunchy, it was a great question, and I am not at all surprised that he completely missed the point. I agree that he might benefit from visiting the blog and reading some posts to become a bit more well-informed.
CrunchyPostingGoodnessOn 04.29.2008 at 8:41 pm Said:
I would also like to add that as to the value of eBay & PayPal fees vs those I pay to Amazon - I see no comparison.
1. Amazon protects me for all Ship To addresses the buyer provides during checkout - Ebay does not. I’m not a Power Seller on eBay.
2. eBay raised its fees, but offered no additional value or features. Sellers pay those fees, even if their item doesn’t sell. Amazon offers me everything I could ever want. I do not pay anything if my item doesn’t sell and I don’t have to continually re-list it.
3. I can sell my items for significantly more on Amazon and with less hassle than eBay.
4. Amazon provides me with an actual, educated person to address any questions or concerns I may have. Ebay just gives me unrelated, automatic canned email responses. I have to call PayPal at least 5 times, and speak to 5 different people, just to get one small issue or question resolved.
5. Amazon listens, and acts on my suggestions for improving their site. eBay - all we get is double talk and silence.
These are just a few of the differences. I, like Brew’s, am happy to pay the fees for a well functioning product. Amazon provides that - eBay does not.
On a side note, I’m a little concerned with Labousisse’s response for another reason. In the “eBay Australia Announces Safe Payment Initiative” thread, Colin Rule, Director of Online Dispute Resolution at PayPal stated on 4.22.2008 at 11:06 PM,
“As Rajiv said at the last eBay Live, that’s the ultimate goal of all these expanded seller protection efforts. We rolled out to Power Sellers first, but it’s clear where all this is heading. I can’t say when it will happen, but I know what the eventual objective is, and it’s exactly what you describe. As Rajiv put it, he wants to make every address confirmed on PayPal. Which of course would mean the end of confirmed addresses.”
Yet, Labousisse made no mention of that at all. Wouldn’t that have been the ideal time to reiterate such a plan for the future? Or is this another case of the right hand not knowing what the left is doing?
The more I see and hear, the less confidence I have in eBay’s and PayPal’s ability to monitor things properly. How can they monitor millions of users, when they can’t even manage their own employees?
I was comforted by the thought that PayPal was actively planning to make ALL buyer addresses confirmed for ALL sellers, but it appears this is not the plan at all.
Patricia 1On 04.29.2008 at 8:47 pm Said:
“With shipping labels printed through PayPal what is PayPal doing to ensure that USPS is scanning all DC packages upon delivery? What recourse do we have if/when they don’t?”
Nothing! In fact just today I had a priority package with the label I printed thru Paypal. I took it to the post office and paid for tracking. The clerk said “it already has free delivery confirmation” and I said yeah but now I have a stamp to prove it was mailed and you people will scan it in right now instead of whenever its delivered. When I’m mailing a higher priced item I’ll pay to get that extra tracking slip for proof.
Patricia 1On 04.29.2008 at 8:49 pm Said:
@ Brews - thanks for that comparison - its a real eye opener.
TheBrewsNewsOn 04.29.2008 at 10:25 pm Said:
Randy, please feel free to repost. I started poking around your blog tonight for the first time. We really should have a cup of coffee together sometime!
SandiOn 04.29.2008 at 11:55 pm Said:
Richard, I asked some questions that relate directly to the upcoming feedback changes last week. While it was nice you got some answers, the feedback issue is truly critical to sellers. Given most of us think ebay management has really lost touch with the environment of ebay, can you please get some answers so sellers can make educated decisions as it relates to the feedback changes?
It would be very helpful in light that often times the employees sellers contact when an issue arises don’t know the rules themselves, as illustrated by the post regarding ebay pulling digital listings before the policy changed.
=====repost with edits=========
Richard, below is the email sellers got today from ebay, I would request you obtain additional information and let us know, as you will note, it is the standard ebay vague:
“Feedback changes to benefit sellers
eBay’s making some important changes to Feedback in May to boost buyer confidence and improve the eBay marketplace. The changes include important protections for sellers against unfair negative Feedback. Negative or neutral Feedback will be removed when it appears a buyer is abusing the system. If you think this is happening to you, report to eBay by using the Contact Us link on any eBay Help page. We’ll also remove Feedback when a buyer doesn’t respond to an Unpaid Item (UPI) report, or if buyer responds but doesn’t specifically call out seller performance, item condition or transaction problems. ”
1. Feedback changes to benefit sellers
—-
Did they laugh when they came up with that sentence?
2. The changes include important protections for sellers against unfair negative Feedback. Negative or neutral Feedback will be removed when it appears a buyer is abusing the system.
—-
What’s the rule, 5%, 40%, when we feel like it? What guideline was written and given to the employees who will be determining this?
How many employees have been hired to ensure customer service being timely and responsive? Saying “we have expended resources” could mean they added a new reply bot, an extra server to catch email afterall. What specifically has ebay done to ensure sellers are in fact protected? Is there an actual email address - not the form - but an email address a seller can contact?
3. if buyer responds but doesn’t specifically call out seller performance, item condition or transaction problems.
—-
Call me simple minded, but this one is just plain puzzling. If a buyer does not pay, how can they possibly have a valid comment about seller performance, item condition or transaction problems? Most sellers follow ebay/Paypal’s rule - get paid before you ship afterall.
Again, how many employees will now be now reviewing ALL UPI disputes, we all know it was an automated system previously, again, can you provide us with the guideline written for employees are responsible for making these decisions.
Look forward to your answers. Thanks Richard!
HenriettaOn 04.30.2008 at 11:38 am Said:
Richard’s post was essentially about shipping and Mr Lathi’s astounding statement that “free shipping is becoming increasingly popular on the web”. Industry marketing journals disagree with Mr Lathi, free shipping is so last year, social networking is the trend of the future.
I would appreciate clarification from Mr Lathi of his unsupported statement.
Is his statement about ‘free’ shipping on purchases with no minimum purchase required? If so would he please provide names of the retailers who are offering this.
Is he thinking merchants will offer standard SLOW ground shipping (which would cause severe DSR damage because MY buyers want their goodies ASAP) or does he expect free expedited? I don’t know what eBay’s buyers want because I have never met one.
I do know that eBay does NOT give free shipping on items purchased from the eBay Shop. It would not be inaccurate to say that eBay’s S&H charge of $17.63 default shipping for a single sticker sheet would get an excessive shipping warning balloon if I listed it. My standard charge is 2.25 for as many sheets as you care to buy.
Does eBay have plans to lead by example?
Is he talking about limited term promotional shipping, which we all do from time to time? That is not the impression I get from his statement.
Patricia1On 04.30.2008 at 11:50 am Said:
Perhaps if ebay LOWERED fees to a reasonable amount…took ADS off our listings that distract buyers….and did a little ADVERTISING with our fees to attract some buyers…we could AFFORD to offer free shipping. Trouble with ebay is they want EVERYTHING at EVERYONE elses EXPENSE and want to offer NOTHING in return! 
permacrisisOn 04.30.2008 at 3:29 pm Said:
@patricia 1, re Delivery Conf
There are 2 things you can do to encourage the pre-printed DC labels to be scanned. I am not saying it is fair that you must do them, only that they work.
1. Take a fluorescent green hi-liter and draw a box around the barcode with a fat green bar above it. This will encourage plant employees to scan your package in transit.
2. Find a NICE postal clerk who will scan your package upon acceptance. Once you do find one, don’t get them in trouble– the USPS INSTRUCTS clerks not to scan the packages, so one who does is doing you a favor. Preserve and protect that relationship!
You may also wish to consider linking the buyer to the Delivery Confirmation email tool. Provided that the package gets scanned in initially, this tool works great.
JJHOn 04.30.2008 at 5:00 pm Said:
@Patricia1
As Permacrisis says, ask the clerk to do an “Acceptance Scan” when you hand the package over. Mine do it all the time for me. Chances are they already know you at your PO and wouldn’t mind. In fact, if I just leave the package on the counter and don’t say anything, 75% of the time it will be scanned on acceptance anyway.
I wasn’t aware that the USPS tells clerks NOT to accept scan packages. What sense does that make? What’s the point of the delivery confirmation system if you can’t see the package is in the system? “Billing Information Received” (same code UPS uses) means NOTHING. You can’t actually prove the package has been mailed and is in the system unless you have a scan showing either it’s been accepted, was scanned somewhere along the way, or “deliver scanned”. Which, incidentally about 1% of my packages are not (delivery scanned). They stay forever as “acceptance scan” or “Billing Information Received”.
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